HONG KONG, Aug. 15 (Xinhua) -- Hong Kong economy slowed down further to a mere 1.8 percent year-on-year growth in real terms in the second quarter of 2014, from 2.6 percent in the first quarter, marking the slowest growth since the third quarter of 2012, according to data released by the government on Friday.
The weak performance was mainly weighed down by a fall-off in tourist spending and a concurrent slowdown in domestic demand, said Helen Chan,a government economist.
On a seasonally adjusted quarter-to-quarter comparison, real Gross Domestic Product (GDP) dipped by 0.1 percent in the second quarter, after a 0.3 percent growth in the preceding quarter.
In cognizance of the worse-than-expected outturn in the first half and taking into account some possible relative stabilization in economic performance in the latter part of the year, Hong Kong economy is only poised to attain modest growth for this year as a whole, with the GDP growth forecast for 2014 as a whole revised downward to 2 to 3 percent, from 3 to 4 percent in the May round of review, according to Chan.
Friday's data showed that total exports of goods staged a modest pick-up in the second quarter, rising by 2.3 percent year- on-year in real terms, up from 0.5 percent in the preceding quarter, though the improvement over the period was brought about mainly by a notable rebound in June.
Exports of services, however, slackened visibly to a 2.3 percent year-on-year decline in real terms, upon a double-digit plunge in exports of travel services, though other items showed some relative improvement. This marked the first decline since the second quarter of 2009.
Local demand also saw some growth slowdown. Private consumption grew only by 1.2 percent year-on-year in the second quarter, after two quarters of subdued economic growth. Investment expenditure relapsed to a 5.6-percent decline, upon a distinct fall in machinery and equipment acquisition, the latter partly affected by an exceptionally high base of comparison a year ago.
The labor market held generally stable. The seasonally adjusted unemployment rate edged up to 3.2 percent in the second quarter, from 3.1 percent in the first quarter. While overall employment and income conditions remained favorable in the second quarter, the slowdown in the tourism sector of late and its potential impact on the labor market going forward need to be closely monitored, according to Chan.
Chan said that looking forward, the global economy is expected to remain on a moderate recovery path in the rest of 2014. This, together with an improving mainland economy, should entail a somewhat brighter export outlook for Hong Kong in the period ahead, though the scope of rebound might continue to be held back by the rather fragile recovery of the advanced markets.
On the local front, demand is likely to maintain only a rather slow pace of expansion in the second half of the year. Local consumer sentiment may turn somewhat cautious following the economic growth slowdown in recent quarters.
As for investment, the results of the latest Quarterly Business Tendency Survey showed that business sentiment weakened in the local consumption-related sectors, while cautiousness lingered in the trade-related sectors, reflecting the headwinds from the still uncertain external environment and the recent abrupt turn in tourism-related sectors.
The data also showed that underlying consumer price inflation eased further, to 3.5 percent in the second quarter of 2014 from 3. 8 percent in the preceding quarter.
With the modest rise in import prices and weaker economic growth momentum, upside risks to inflation have receded somewhat. Taking into account the actual outturn in the first half of the year, the forecast rates of headline and underlying consumer price inflation for 2014, at 4.6 percent and 3.7 percent respectively in the May round, are revised downward in the current round of review, to 4.4 percent and 3.5 percent respectively.